National Company Law Appellate Tribunal, New Delhi: While deciding an appeal related to ending back the Resolution Plan for re-consideration after the approval of CoC, a Division bench comprising of Ashok Bhushan*, J., and Mr. Barun Mitra (Technical Member) held that the approved Plan is not violative of S. 30 (2) and there no breach of procedure or manifest error in the approval of the Resolution Plan, therefore the Resolution Plan cannot be send back for re-consideration.
Factual Matrix
In the instant matter, the Resolution Professional (RP) had filed an application before the Adjudicating Authority for approval of Resolution Plan. However, the Adjudicating Authority, vide order dated 06-09-2022, rejected the application and sent back the Resolution Plan before the CoC for its reconsideration on the application by other Resolution Applicants whose plans were rejected. The Adjudicating Authority further allowed the other Resolution Applicants to submit the Resolution Plan.
Aggrieved by the impugned order the appellant/Successful Resolution Applicant preferred an appeal before NCLAT challenging the same.
Parties’ Contention
The appellant’s contention is that the Adjudicating Authority committed an error in remitting the Resolution Plan for reconsideration before the CoC as the same is already approved. Moreover, remission of the Plan for reconsideration is not in accordance with the scheme of the Insolvency and Bankruptcy Code, 2016 (IBC) and CIRP Regulations. The appellant further contended that it is not open to CoC or any other Resolution Applicants who did not participate in the resolution process, to claim that he is ready to offer a higher amount because such intervention is against the scheme of the IBC.
The respondents contended that after Covid-19 the Hotel businesses which were adversely affected earlier has picked up a pace and several Resolution Applicants have made higher, which required to be considered for the purpose of maximization of the value of the Corporate Debtor. The respondents further contended that the Adjudicating Authority has rightly issued a direction to reconsider the Plan in view of object of IBC which is maximization of the value of the Corporate Debtor. Moreover, the CoC is willing to consider the Resolution Plan and the Adjudicating Authority cannot pass an order directing an unwilling CoC to reconsider the Resolution Plan.
Moot Point
Whether the Resolution Plan can be sent back for reconsideration by the CoC in case Resolution Plan has been approved and submitted to Adjudicating Authority?
Observation and Decision
NCLAT opined that it is not disputed that the Adjudicating Authority as well as the Tribunal has ample jurisdiction to interfere with the Resolution Plan, if the same is not in accordance with S. 30(2)(b) IBC.
While referring to Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401, NCLAT observed that after approval of the Resolution Plan by the CoC, the same is binding between CoC and the Successful Resolution Applicant and then the Adjudicating Authority has a limited jurisdiction to confirm or deny the legal validity of the Resolution Plan in terms of S. 30(2)(b) IBC.
The Supreme Court in Ebix Singapore (P) Ltd. (Supre), held that although Covid-19 had significant impact on the business of the Corporate Debtor, but the legislative intent of the statute cannot be overridden by the Court.
NCLAT observed that the period of CIRP was over long ago, and the Adjudicating Authority cannot direct the CIRP process to begin again by providing for inviting applications for fresh Resolution Plan, after about two years of subsequent completion of CIRP period.
“The maximisation of value of the Corporate Debtor is admittedly an object of the CIRP, but the said maximisation has to be achieved within the timeline provided in the scheme.”
NCLAT opined that the approved Plan is not violative of S. 30(2) as there is no breach of procedure or manifest error in the approval of the Resolution Plan and the CoC cannot have a change of heart and start saying that they have no objection to sending back the Resolution Plan for reconsideration.
“The object of IBC is to revive the Corporate Debtor and put it again on the track. When a Resolution Plan, has been approved after due deliberations, in exercise of commercial wisdom of the CoC, it has to be accepted that Corporate Debtor was decided to be revived by the Resolution Plan. The mere fact that certain other offers have been received after the approval of the Resolution Plan, CoC cannot have a change of heart and start clamoring before the Adjudicating Authority that they have no objection to sending back the Resolution Plan for reconsideration. This will be permitting an unending process, since by passing of time situation keeps on changing.”
Decision
Setting aside the impugned order passed by the Adjudicating Authority, NCLAT remitted the matter to the Adjudicating Authority to pass fresh order for the approval of the Resolution Plan and directed the Adjudicating Authority to pass a final order within a period of three months from the date the copy of this order is produced.
[Express Resorts and Hotels Ltd. v. Amit Jain, 2023 SCC OnLine NCLAT 97, decided on 09-02-2023]
*Judgment authored by Justice Ashok Bhushan
Messiah of the sufferers: Bidding adieu to Justice Ashok Bhushan
Advocates who appeared in this case:
Mr. Ramji Srinivasan, Sr. Advocate, Mr. Abhijeet Sinha, Mr. Raheel Patel, Mr. Himanshu Satija, Ms. Shruti Pandey, Mr. Harsh Saxena, Counsel for the Appellant;
Mohd. Shahan Ulla and Mr. Varun Kalra, Counsel for the Respondent No. 1;
Mr. Neeraj Malhotra, Sr. Advocate, Mr. R.P. Agrawal, Ms. Vidhisha Haritwal, Mr. Nimish Kumar, Counsel for the CoC/Respondent No. 4, 7, 9 and 12;
Mr. Karan Valecha, Counsel for the SANKALP (Intervenor).